The termination of the Student Aid Value Expansion (SAVE) plan will impact over 27 million borrowers, with many facing significant increases in monthly payments starting in early 2026. The change marks a major shift in federal student debt relief policy.
- 27.3 million borrowers previously enrolled in the SAVE plan are affected by its termination
- Monthly payments may increase from 5% to up to 10% of discretionary income
- Borrowers with $50,000 in debt and $80,000 income could see monthly payments rise from $280 to $550
- Loan forgiveness timeline extends from 20 to 25 years under the new structure
- Over $1.7 trillion in federal student loans are impacted by the policy change
- New framework reduces eligibility for forgiveness and increases default risk for low-income borrowers
The federal government has formally ended the Student Aid Value Expansion (SAVE) plan, a repayment program that had capped monthly payments at 5% of discretionary income for millions of borrowers. With the rollout of the new standard income-driven repayment framework, 27.3 million borrowers who previously benefited from SAVE will now be subject to revised terms. Under the new plan, payments may rise to as high as 10% of discretionary income, depending on income level and loan balance. The shift follows a series of legal and administrative challenges that led to the dismantling of the SAVE plan’s extended benefits. Borrowers with federal student loans totaling more than $1.7 trillion are now reassessed under the revised rules, with those earning above $75,000 annually likely to see the most pronounced increases. For example, a borrower with $50,000 in debt and an annual income of $80,000 could see payments jump from $280 to $550 per month. The change affects all borrowers in the federal direct loan portfolio, including those who had been on track for loan forgiveness after 20 years of payments under SAVE. Under the new structure, the forgiveness timeline extends to 25 years for most, and eligibility conditions are stricter. This adjustment is expected to increase default risk among lower-income borrowers and may strain household budgets in the coming year. Financial institutions, servicers, and advocacy groups are preparing for a wave of borrower inquiries and potential delinquency spikes. The Department of Education has launched a public outreach campaign to help borrowers transition, but critics argue the guidance lacks clarity and sufficient outreach, particularly for vulnerable populations.